SPIEGEL Interview with Airbus CEO Thomas Enders 'The Game Is Just Beginning'

Airbus chief executive Thomas Enders, 48, discusses insider trading accusations, past management mistakes and the difficulties the European aerospace giant faces in becoming a normal company.

SPIEGEL: Mr. Enders, you are the fifth CEO of Airbus in the space of only two years. As a former paratrooper, how does it feel being in the ejection seat?

Enders: When you're going into a difficult mission as a paratrooper, you know that success is not guaranteed. The same applies in my job. As the former co-CEO of parent company EADS, I don't exactly see Airbus as unknown terrain. In other words, I knew what to expect.

SPIEGEL: Does that also apply to the recent insider trading investigation by the French financial supervision authority, the AMF? The agency accuses you and other senior executives, past and present, of having sold stock at a time when you were already aware of looming production problems with the A380 super-jumbo jet.

Enders: I was surprised and shocked by the suspicions and accusations in the press. To this date, I am not familiar with the alleged document from the French financial supervision authority. This is an impossible case. Of course, we are looking into steps we can take to fight it. But the investigation itself is not surprising. After all, I was just at a hearing before the AMF three weeks ago.

SPIEGEL: Is there anything to the accusations?

Enders: No, absolutely not. It is a known fact that, in 2004 and in November 2005, I participated in a stock options program for executives that was approved by the supervisory board. At the time, I saw no reason to assume that this sort of transaction could later be described as questionable.

SPIEGEL: The AMF bases its suspicions on concrete evidence that the supervisory board, of which you were also a member, discussed impending cost increases for the A380. In October, the decision was made to spread the additional cost across three years of balance sheets to prevent EADS stock from plummeting.

Enders: Noël Forgeard, the head of Airbus at the time, announced in the early summer of 2005 that initial deliveries would be delayed by up to half a year. This information had not changed by November. At the time, Airbus management was trying to get a handle on the problems with the A380. When we realized, in June 2006, that our efforts were not successful, we announced this to the public right away. And then it took us until October to reveal the entire truth.

SPIEGEL: Your new boss, EADS chief Louis Gallois, has proposed getting rid of stock options altogether at EADS in the future. Do you support his proposal?

Enders: That's a decision for the EADS shareholders. I don't get mixed up in that. But if there is a compensation model, it should be possible to use it.

SPIEGEL: Do you have any idea why the preliminary results of the AMF investigation are being leaked to the public precisely at this point?

Enders: No, I don't. But it is clear that the headlines come at a particularly bad time for us. We are just now getting back on our feet. The first A380 is about to be delivered to Singapore Airlines. Customers are ordering the A380 once again: British Airways recently and then, just a few days ago, Spain's Grupo Marsans. The same applies to our brand-new long-range jet, the A350 XWB.

SPIEGEL: The delivery of the first A380 on Monday of this week marks the preliminary end of an almost two-year cliffhanger. To complete the jet on time, employees had to be transferred to the Toulouse assembly plant from all across Europe. How much longer to you plan to produce the jet using this costly individualized approach?

Enders: The first wave of 25 planes, including the five test aircraft, will in fact be produced in what is essentially manual labor. For the second wave, a modern, harmonized IT system will be used which does, in fact, make industrial series production possible.

SPIEGEL: Are further delays possible?

Enders: In fact, we still have the biggest challenge ahead of us. The A380 program will only be over the hump once we manage to ramp up production in the next two years according to plan. We plan to deliver 13 aircraft next year and, by 2010, to reach four aircraft a month. These are ambitious goals.

SPIEGEL: How many aircraft do you have to sell to turn a profit?

Enders: Boeing wouldn't give you an answer if you asked them the same question about their 787 long-range jet. But I am confident that the plane will be worthwhile for us in the long term. The excitement with which the heads of major airlines walk through their aircraft, inspecting their cabins, speaks volumes. The A380 happens to be a fascinating aircraft. I predict that this is only the beginning of the second wave of orders.

SPIEGEL: Your other big problem is the A350, the model that's competing with the 787. It had to be completely revised, in response to pressure from customers. How could this happen?

Enders: It's very simple: We had underestimated Boeing. We hope that will never happen to us again.

'A Jolt Is Going Through the Company'

SPIEGEL: How do you plan to prevent management mistakes such as those that happened with the A380 and the A350 in the future?

Enders: The key is integration and transparency, both internally and externally. Airbus is now being fully integrated, finally. We are still dealing with the repercussions of a certain bunker mentality and the old bad habit of concealing bad news. Our new "Power 8" program is designed to tightly integrate development and production -- and to do so from the very beginning. To keep costs down with the new A350 XWB, everyone involved in the project, including buyers and suppliers, is already sitting at the same table in the early design stage. Besides, we have new, tighter management as of Oct. 1. Believe me, a jolt is going through the company.

SPIEGEL: Nevertheless, Boeing is held up to you as a shining example, because the 787 is made primarily of state-of-the-art carbon fiber composites.

Enders: If you are referring to certain comments, all I can say is this: Things have changed! In fact, our new concept is quite convincing, as customer reactions demonstrate: Five years before the first planned delivery, we already have more than 270 orders on the books and expect to receive additional orders in the coming months.

SPIEGEL: But Boeing has sold almost three times as many of its new jets.

Enders: Our market forecasts and those of Boeing are based on the assumption that more than 5,000 of this type of aircraft will be sold in the next 20 years. In other words, the game is just beginning.

SPIEGEL: But Boeing seems to be playing with a better hand. Many of your plants lack the know-how to produce the new plastic fuselages in sufficient quantities and at the necessary level of quality.

Enders: Nonsense! Our plants in Stade, Nantes and Illescas in Spain have long been in command of this technology and are not in any way inferior to Boeing in this regard. But we cannot come up with the needed investment money to convert all Airbus operations to carbon fiber production. That's why we plan to sell some of our plants to new owners.

SPIEGEL: That decision was reached more than a year ago. Why is it taking so long to implement?

Enders: We want to make three complex decisions at the same time: sell plants, secure our long-term investments there and agree to an arrangement to participate in the production of the A350 XWB. The decision is also critically important to the future of Airbus. That's why we are not allowing the new deadlines constantly being thrust upon us to prevent us from selecting the right partner. We will decide when we're ready.

SPIEGEL: Voith, an engineer manufacturer that was apparently the German government's first choice, just withdrew its offer. Why?

Enders: That was Voith's decision, which I respect. But we still have two offers for each site -- so there is still some competition.

SPIEGEL: Is there growing political pressure to award the contract to the last remaining domestic contender?

Enders: Of course, when you are dealing with national politicians there are preferences for national solutions. This is no different in Germany than in France or Great Britain. But you won't be seeing a feel-good or cozy compromise designed to satisfy political interests, which could leave us with some big problems in the medium term.

SPIEGEL: Selling a few plants to new owners won't help you much against the rampant decline in the dollar's value against the euro, as long as you're producing mainly in Europe.

Enders: Suppliers can certainly use these plants more efficiently to find new customers in other markets and expand the product portfolio. Of course, the new owners -- just like us -- will also be forced to shift a portion of their value-added production to locations outside Europe.

SPIEGEL: With a detrimental effect on German jobs?

Enders: With a positive effect on Airbus's competitiveness. From the standpoint of politics, our world has been ideal up to now, because 95 percent of our employees are based in Europe. But we earn most of our revenues outside Europe. This means that we will have to shift a portion of our business in the future to other countries where there is a growing aviation industry.

SPIEGEL: You also need the support of the political world to turn Airbus into a perfectly normal business. But it continues to keep a jealous watch to ensure that no single location in a country is favored or put at a disadvantage.

Enders: Of course there are always national perquisites. But our analyses of the cable problems in the A380 have shown that they were merely a symptom of the real, underlying cause: the lack of integration and dovetailing of processes within the company. This is our big issue, the one where we need to see some change.

SPIEGEL: But that doesn't change the fact that political criteria will ultimately determine the outcome of decisions on manufacturing sites.

Enders: I'm taking a wait-and-see approach. For example, if the Germans can't keep up with their orders, the French, British or the Spanish will have to finish the job. Of course, the opposite is also true. In the end we're all in the same boat, and customers don't care where we manufacture what. All they care about is when we can deliver. We need flexibility beyond national borders.

SPIEGEL: Representatives of the German and French governments take a different view. The French state owns 15 percent of Airbus parent company EADS. The federal government in Germany, as well as states like Lower Saxony and Hamburg, have also recently acquired smaller shares of the group.

Enders: I'm not too concerned about that. But perhaps one day the head of Airbus will be asking them: What is more important to you -- that Airbus is a healthy, successful company and can keep up with Boeing? Or do you prefer to focus on your national and regional interests? I believe there is only response to this question.

SPIEGEL: Only a few months ago, you were supposed to get the top job at parent company EADS, not the one at Airbus. What happened?

Enders: Well, life is full of surprises. But, in all seriousness, I discovered that I like this job better. Where is the future of the EADS Group being decided? At Airbus, which is still responsible for two-thirds of the group's revenues. I didn't want to be standing on the sidelines.

SPIEGEL: Doesn't it bother you that your former colleague, Gallois, has to approve all of your important decisions?

Enders: I don't have a problem with that. Louis Gallois is a very experienced manager. We have an excellent relationship.

SPIEGEL: The Airbus employees in Toulouse had significant reservations about you. Many perceive your enthusiasm for America and your tendency to come across as militaristic and abrupt as a culture shock.

Enders: All I can say is that my reception at Airbus and in Toulouse was extremely warm and genuine.

SPIEGEL: What distinguishes you from your predecessors?

Enders: You'd have to ask the Airbus employees. But I do know that the people at Airbus want to see a man at the top and a management team without their heads in the clouds. They prefer someone who is familiar with the reality of those who work in the plants, sometimes around the clock. They expect their boss to talk to them instead of just feeding them presentation slides in five different colors. I like that.

SPIEGEL: And do you confront the employees with uncomfortable truths, if need be?

Enders: I happen to be someone who doesn't beat about the bush. I like to get to the point. You will not see me changing my style now and tiptoeing around. The important issue is that people realize that I am a hands-on manager -- not someone who's interested in politics, but someone who has the company's interests at heart. Can you imagine a better job in European industry than running Airbus?

SPIEGEL: Sure: The head of Siemens, for example.

Enders: That job is taken, as far as I know. At Airbus, I have the great opportunity to help a great company survive in the future, as well as to bring about fundamental changes.

SPIEGEL: Mr. Enders, thank you for this interview.

Interview conducted by Dinah Deckstein and Armin Mahler at Airbus headquarters in Toulouse, France.

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